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Understanding the Challenge Procedure under The Arbitration and Conciliation Act

The Arbitration and Conciliation Act, 1996, in India, is an act of the Indian Parliament aims to provide a legal framework for conciliation and arbitration in the country. This piece from the experts at SimranLaw seeks to decode the ‘Challenge Procedure’ as stipulated under the said act. The article will delve into the complexities of the challenge procedure and offer some case law insights along the way.

Understanding the Challenge Procedure

• The challenge procedure refers to the legal process through which a party can contest or challenge the appointment, decisions, or conduct of an arbitrator based on various grounds.

• These grounds are primarily derived from Section 12 and Section 13 of the Arbitration and Conciliation Act.

Grounds for Challenge

1. Reasonable Doubt in Impartiality – Section 12(1)

   • Any circumstances likely to give rise to justifiable doubts as to his independence or impartiality

2. Lack of arranged Qualifications – Section 12(3)(a)

   • If he or she does not possess the qualifications agreed to by the parties

3. Inability or Refusal to Perform Duties – Section 12(3)(b)

   • If he or she is unable or, for other reasons, fails to act without undue delay

   • If he or she fails to use all reasonable dispatch in entering on and proceeding with the arbitration and in making an award

The Challenge Procedure – Section 13

The challenge procedure is governed mainly by Section 13 of the Arbitration and Conciliation Act. The section provides a detailed overview of the procedure, which can be broken down into the following key steps:

1. A party may, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section (3) of section 12, send a written statement of the reasons for the challenge to the arbitral tribunal.

2. Unless the arbitrator challenged under sub-section (2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.

3. If a challenge under any procedure agreed upon by the parties or under the procedure under sub-section (4) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award.

4. Where an arbitral award is made under sub-section (4), the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with section 34.

Case Laws and Judgments

1. National Thermal Power Corporation Vs Siemens Atkeingesellschaft

   1. In this case, it was held that if a sole arbitrator remains neutral and unprejudiced towards any party, then the party does not have grounds to challenge the arbitrator.

2. Konkan Railway Corporation Ltd. & Ors. Vs. Rani Construction Ltd.

   1. In this case, it was ruled that if a challenge is rejected under Section 13 and the parties proceed with the arbitration, they cannot initiate proceedings under Section 34 to set aside the award on the ground of challenging the arbitrator.

This article offers a fundamental understanding of the challenge procedure under the Arbitration and Conciliation Act. The law and its procedures can be complicated, and while this article provides a baseline understanding, it is always advisable to seek professional legal counsel in order to fully understand and navigate through these processes.